Glenn Yago

The Role of Governments and Markets in International Banking Crises: The Case of East Asia

Throughout the world there have been a large number of significant banking problems in recent years. In East Asia since 1980 there have been varying degrees of banking problems in ten countries: China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. Our goal in this paper is to try to explain what caused the recent difficulties and to suggest ways to prevent future problems. In doing so, we specifically focus on the banking crises in the region and attempt to explain what they have in common with other banking crises around the globe, including those in countries like the United States, with the most well-developed financial systems in the world. An important element in understanding these issues is assessing the appropriate mix of government intervention and market forces in designing a national financial system in a global marketplace.

Stumbling Blocks to Entrepreneurship in Low- and Moderate-Income Communities

Recent efforts to understand what works best at promoting entrepreneurship in the United States, particularly in low- and moderate-income communities, are reviewed. First, the importance of entrepreneurial activity to economic health and development and social welfare is discussed. Limiting the potential of low- and moderate-income individuals to become self-employed or start a small business restricts the growth and prosperity of a large and increasing potential portion of the U.S. population. One stumbling block to entrepreneurial activity by this population is the lack of access to capital. The percent of small loans made by banks to businesses in their local communities under the Community Reinvestment Act is investigated. Substantial variation was found in the income-based measure of loan bias - that is, whether the share of loans to businesses in low- to moderate-income communities is equal to the share of total low- to moderate-income individuals in each community. Further investigation is required to find out why some low- to moderate-income communities received a larger proportion of small loans than others. Several databases are presented to aid this process.

Hedge Funds: Structure and Performance

Despite recent research on the actual hedge fund strategies, considerable debate continues as to the cause of the rise of hedge funds, their actual description, and their performance (onshore and offshore). In this article, a wide variety of issues relating to hedge fund performance and function are discussed and described, including hedge fund history and performance.

Financial Innovations and the Stability of the Housing Market

The recent crisis has underlined the importance of the interaction of financial innovations and the housing market. We consider five major innovations relevant to housing finance. These are (i) mortgages; (ii) specialised housing finance institutions; (iii) government interventions in housing finance in the US during the Great Depression; (iv) covered bonds; and (v) securitised mortgages. The history of these innovations and their positive and negative aspects are discussed. Future innovations to help the stability of the housing market are also suggested.

Deleveraging Corporate America: Job and Business Recovery Through Debt Restructuring

When the Great Recession roiled capital and labor markets in early 2009, up to a third of U.S. public corporations, and nearly 60% of privately owned companies, reported high levels of financial distress resulting from frozen credit markets. And the problems of debt overhang- and corporate underinvestment were clearly in evidence as the combination of default risk and a relatively new provision of the tax code restricted the ability of distressed companies to deleverage their capital structures. But as described in this article, at least 110 U.S. companies used a little known provision in the American Recovery and Reinvestment Act of 2009 to defer taxes on the cancellation of debt income (CODI) resulting from exchanges or repurchases of significant amounts of debt. This suspension of tax policy gave many distressed U.S. companies the flexibility to cut costs, shore up balance sheets, and boost liquidity, thereby keeping themselves in business and their workers employed throughout the economic crisis. The 110 companies examined either repurchased or exchanged a total of

The U.S. Savings and Loan Crisis in Hindsight 20 Years Later

32.5 billion of corporate debt. The deleveraging of these companies, which represented more than

Hedge Funds: Systemic Risk and Public Policy

2.2 trillion in total assets and

A Cross-Country Analysis of the Bank Supervisory Framework and Bank Performance

520 billion in market capitalization, helped them to remain solvent throughout the downturn and retain their collective 2.2 million employees. The resulting tax savings are estimated to have saved (or in some cases created) almost 90,000 jobs, while contributing

Economic Impacts of Global Terrorism: From Munich to Bali

3.2 billion to total corporate earnings and

Financing the Future: Market-Based Innovations for Growth

10.7 billion of output to the national gross domestic product. Although this approach could be criticized as adding to the federal budget deficit, the deferral of taxes on CODI is viewed as a targeted financial policy tool aimed directly at boosting the productive capacity and employment of corporate enterprises.